Inflation ticked higher in the US in January as Donald Trump returned to office with a pledge to rapidly reduce prices.
The consumer price index rose by 3% last month – up slightly from December’s annualized 2.9% reading.
The closely watched index rose 0.5% on a month-to-month basis, stronger than the 0.3% forecast by economists.
The so-called “core” index, which strips out volatile food and energy prices, rose from an annualized rate of 3.2% in December to 3.3% in January.
Wednesday’s data appeared to rattle investors, with Wall Street coming under pressure. The S&P 500 and Dow Jones industrial average were each down by about 1% after New York opened for trading. The 10-year US treasury yield – a key barometer for US economic expectations – rose to about 4.629%.
Inflation soared across much of the world three years ago, as the pandemic continued to distort the global economy and supply chains. It peaked at 9.1% in the US, its highest level in a generation.
While price growth has since fallen dramatically, consumer prices have remained high – challenging perceptions of an economy which, on paper, has proved remarkably resilient.
The latest inflation data will heighten speculation as to how quickly policymakers at the US Federal Reserve will cut interest rates, which they raised aggressively in an attempt to cool the world’s largest economy and reduce price growth.
Minutes before Wednesday’s report was released, Trump declared that the rates “should be lowered” by the Fed, a move he said “would go hand in hand” with his plan to impose steeps tariffs on overseas imports.
“Lets Rock and Roll, America!!!,” the president wrote on Truth Social, his social network. Shortly after the data was published, he added: “BIDEN INFLATION UP!”
Many economists have warned that Trump’s tariff strategy risks exacerbating inflation.
As millions of Americans struggled with the cost of living last year, Trump promised to take action on the campaign trial. “Prices will come down,” he declared during one speech. “You just watch – they’ll come down, and they’ll come down fast.”
Since his election victory last November, however, Trump has appeared to soften his pledge. “I’d like to bring them down,” he told Time magazine of prices in December. “It’s hard to bring things down once they’re up. You know, it’s very hard.”
Asked by Fox News when families will be able to “feel prices going down” this weekend, the president changed the subject and claimed other countries were taking advantage of the US.
